Brookings: Experts - Alan Berube

Suburban Poverty Profiles: Montgomery County, Maryland

Alan Berube and Elizabeth Kneebone — Wed, 22 May 2013 13:27:00 -0400

Editor's Note: Suburban Poverty in America, a new book by Elizabeth Kneebone and Alan Berube, explores the growth of suburban poverty and offers unique policy solutions for revitalizing struggling communities. Montgomery County, Maryland is one of the spotlight suburbs, whose plight has also been recognized by NPR. Learn more about the book and other suburban communities at confrontingsuburbanpoverty.org.

Montgomery County, Maryland— a suburban county adjacent to the nation’s capital— consistently ranks among the country’s wealthiest counties. In 2010, it ranked twelfth in the nation for median household income at more than $89,000. Yet in recent years, this million-person jurisdiction has grown increasingly demographically and economically diverse, changing the scope and scale of need among the county’s residents.

The 2000s, in particular, were a period of marked transformation in Montgomery County. Through the middle part of the decade, more jobs and people came to the county and the number of residents living in poverty dropped slightly. However, the disruption of the Great Recession more than erased those gains. No other county in the Washington region, including the District of Columbia, experienced increases in poverty of the same magnitude during the late 2000s.

Data Point: In the three years between 2007 and 2010, Montgomery County shed more than 37,000 jobs, dropping below its 2000 jobs total by 2010.

At the same time that the county faced unprecedented economic challenges, it also experienced a rapid demographic transformation. The 2010 census revealed that, for the first time, non-Hispanic whites constituted less than half (49 percent) of the county’s residents, down from 73 percent two decades earlier. And while immigrants accounted for fewer than one in five residents in 1990, in 2010 they represented almost one-third of the population and almost 40 percent of poor residents.

Data Point: Between 2007 and 2010, the number of residents living below the federal poverty line grew by two-thirds, or more than 30,000 people, pushing the poverty rate up by nearly 3 percentage points.

Rapid increases in poverty, coupled with the shifting demographics, often left communities in suburban Montgomery County struggling to play catch-up without the resources to match the growing and changing needs of their residents. In response, leaders across the county came together to make sure diverse communities in need do not miss out on critical safety net services because of lack of information or cultural barriers, described further in our local innovation profile of Montgomery County’s Neighborhood Opportunity Network (PDF).

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Confronting Suburban Poverty in America - Release Event

Mon, 20 May 2013 09:30:00 -0400

Event Information

May 20, 2013
9:30 AM - 11:30 AM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue, N.W.
Washington, DC 20036

Click here to visit the Confronting Suburban Poverty in America website.

In 1965, President Lyndon B. Johnson declared a war on poverty. Back then poverty was largely confined to inner-city neighborhoods and isolated rural areas. Today, the overwhelming majority of America’s poor live not in cities—but in the suburbs of its major metropolitan areas. Yet the paradigm of poverty in America, and the infrastructure for addressing the conditions poor families and communities face, has failed to keep pace with the reality of these changes. The problems of the growing suburban poor are now exacerbated by a weak economy and increasingly limited resources for nonprofits, philanthropies and government at all levels.

As with many challenges facing the nation, metro area leaders are leading the way in the search for solutions—learning how to do more with less and adjusting their approaches to address the metropolitan scale of poverty, collaborating across sectors and jurisdictions, using data and technology in innovative ways, and integrating services and service delivery.

In Confronting Suburban Poverty in America (Brookings, 2013), co-authors Elizabeth Kneebone and Alan Berube, take on the new reality of metropolitan poverty and opportunity in America. On May 20, they along with some of the nation’s leading anti-poverty experts, including Luis Ubiñas, president of the Ford Foundation, and Bill Shore, founder and CEO of Share our Strength, and leading local innovators from across the country discussed a new metropolitan opportunity agenda for addressing suburban poverty, how federal and state policymakers can deploy limited resources to address a growing challenge, and why building on local solutions holds great promise.

Click here to visit the Confronting Suburban Poverty in America website.

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Confronting Suburban Poverty in America - Release Event

Confronting Suburban Poverty in America

Elizabeth Kneebone and Alan Berube — Mon, 20 May 2013 00:00:00 -0400

Brookings Institution Press 2013 184pp.

Video

Presentation - Confronting Suburban Poverty in America

Elizabeth Kneebone and Alan Berube have spent over a decade researching poverty. In 2006, they began work on a report and discovered trends that surprised them. In Confronting Suburban Poverty, they explore the whats, whys and meanings of suburban poverty and what it brings to social issues.

Excerpt:

Buried within our analysis was a trend that struck us as noteworthy: by our calculations, there now seemed to be more poor people in metro areas living outside of big cities than within them.

We first got into the issue of suburban poverty by accident. Other than having grown up in the suburbs like most Americans our age (Elizabeth around Indianapolis; Alan around Worcester, Massachusetts), neither of us ever really studied suburbia very carefully. And each of us today lives in a big city (Washington, D.C.). But in 2006 we wrote a Brookings report about poverty trends in cities and metropolitan areas in the 2000s. Buried within our analysis was a trend that struck us as noteworthy: by our calculations, there now seemed to be more poor people in metro areas living outside of big cities than within them. We spoke with a lot of people about the report, and they had trouble wrapping their heads around that statistic. Admittedly, we did, too.

The changing map of American poverty matters because place matters… Place intersects with core policy issues central to the long-term health and stability of metropolitan areas and to the economic success of individuals and families…”

As poverty becomes increasingly regional in its scope and reach, it challenges conventional approaches that the nation has taken when dealing with poverty in place. Many of those approaches were shaped when President Lyndon B. Johnson declared a national War on Poverty in 1964. At that time, poor Americans were most likely to live in inner-city neighborhoods or sparsely populated rural areas. Fifty years later, public perception still largely casts poverty as an urban or rural phenomenon. Poverty rates do remain higher in cities and rural communities than elsewhere. But for three decades the poor population has grown fastest in suburbs.

The changing map of American poverty matters because place matters. It starts with the metropolitan areas, the regional economies that cut across city and suburban lines and drive the national economy. Place intersects with core policy issues central to the long-term health and stability of metropolitan areas and to the economic success of individuals and families— things like housing, transportation, economic and workforce development, and the provision of education, health, and other basic services. Where people live influences the kinds of educational and economic opportunities and the range of public services available to them, as well as what barriers to accessing those opportunities may exist. The country’s deep history of localism means that, within the same metropolitan area, a resident of one community will not necessarily have the same access to good jobs and quality schools, or even basic health and safety services, as a person in another community, whether across the region or right next door.

Perhaps most emblematic of the fast-growing suburban communities that multiplied in the postwar era were the developments built by Abraham Levitt and his sons William and Alfred. In the Levittowns built on Long Island, and outside Philadelphia (in Bucks County, Pennsylvania, and Willingboro, New Jersey), Levitt and Sons honed their approach to suburban development, using a standardized housing design, preassembled parts, and vertical integration of suppliers to speed production. Regarding these cookie-cutter Cape Cods with a living room, a bathroom, two bedrooms, a kitchen, and a yard, Kenneth Jackson observed, “This early Levitt house was as basic to post World War II suburban development as the Model T had been to the automobile. In each case, the actual design features were less important than the fact that they were mass produced and thus priced within reach of the middle class.” Jackson also noted that while Levitt did not invent many of the techniques he employed, the wide publicity of his developments served to popularize his approach. Large builders in metropolitan areas throughout the country—including developers in Boston, Chicago, Cleveland, Denver, Houston, Los Angeles, Phoenix, San Francisco, and Washington— adopted similar methods.

* * *

Confronting Suburban Poverty is available in both hardcover and eBook formats:

Infographic; What’s Driving the Rapid Rise of Poverty in the Suburbs?:

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On May 20, the Metropolitan Policy Program at Brookings hosted an event marking the release of Confronting Suburban Poverty in America, co-authored by Elizabeth Kneebone and Alan Berube. Below, you can watch a piece of the event with Elizabeth Kneebone, as she discusses how the landscape of poverty in America has changed.

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ABOUT THE AUTHORS

Elizabeth Kneebone

Alan Berube

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Finding the ‘New’ Mexico in Querétaro

Joseph Parilla and Alan Berube — Fri, 15 Mar 2013 00:00:00 -0400

Nearly five centuries after the arrival of Hernán Cortés on its shores, Mexico is being rediscovered again. After years in which drugs and thugs led the Mexico headlines in Western media, no less than the Economist, Foreign Affairs, and the Financial Times now highlight the country’s rapid federal reforms, booming middle class, and strong current and projected economic growth. Mexico City, which was largely spared from the recent wave of violence, is booming with new residential and commercial construction, including what will be the tallest building in Latin America. And upon visiting Monterrey, Mexico’s third largest region, New York Times columnist Tom Friedman described “How Mexico Got Back in the Game.”

But the “new” Mexico—site of this year’s Global Cities Initiative international forum—is exemplified best by neither Mexico City nor Monterrey. To see it, we drove two and a half hours northwest of the capital to the city and state of Querétaro. For decades, the 2 million-person state was perhaps best known as the site where Mexico’s current Constitution was ratified in 1917. Now, Querétaro is ground zero for the country’s economic revolution, achieving average annual GDP growth of 5.5 percent over the last decade, highest among Mexico’s 31 states. It is home to major multinational corporations like GE and Samsung, a burgeoning middle class, new golf courses, and what will soon be Latin America’s second-largest shopping mall, all within a stone’s throw of an immaculately preserved colonial center (a UNESCO World Heritage site).

What accounts for Querétaro’s economic energy? Both state leaders and local residents credit the 2005 arrival of Bombardier, the Canadian aerospace and transportation manufacturer, as the catalytic investment that put Querétaro on the global map. The firm was attracted to the region’s well-educated population and the promise from federal and state governments to locate a new aerospace university, UNAQ (Universidad Aeronáutica en Querétaro), to supply the budding cluster with skilled workers. Of the 1,800 workers at Bombardier, nearly two-thirds were trained at UNAQ, and the firm works closely with the university to tailor the curriculum for all rungs of the aerospace career ladder—from production workers to engineers.

Beyond its local assets, Querétaro lies at key intersection of North American advanced manufacturing. It sits at the convergence of Mexico’s road, rail, and telecommunications network, right along the “NAFTA Highway” that allows parts to be shipped to Wichita and Toronto for assembly much more quickly than from China. Bombardier’s plant abuts the brand new Querétaro International Airport, whose runways the state hopes will test the first entirely Mexican-made aircraft within a decade. And with Querétaro producing fuselages, wings, and electrical harnesses; Wichita offering design and assembly; and Montreal providing research and development, Bombardier’s supply chain for the Learjet 85 benefits from the distinct specializations of three metropolitan economies all within two time zones and one free trade area.

Queretaro’s story exemplifies the increasingly important role Mexican metropolitan areas play in advanced industry supply chains—such as aerospace, automotive, and appliances—that unite North America as one de facto economic market that not only trades goods, but co-produces them for the rest of the world. Nearly 20 years after NAFTA’s passage, 40 percent of what the United States imports from Mexico is actually American-made content. With global economic winds like the shale gas revolution, eroding cost advantages for Chinese labor, and the “just-in-time” production imperative at North America’s back, the continent has clear incentives to integrate further to compete with Asia, Europe and the rest of Latin America.

Yet the administration of newly elected Mexican President Enrique Peña Nieto recognizes that the country can no longer simply integrate into global value chains. Its economic strategy seeks to move Mexican firms up those value chains by boosting productivity, innovative capacity, and entrepreneurial dynamism in key sectors. To do so, it must build from the sort of strengths evident in regions like Querétaro, which are building expertise and infrastructure to accommodate higher-value activities like research, design, and finance.

Mexico’s rise could usher in an even more prosperous next 20 years for North America, but not without stronger cooperation between the three nations. With the Obama administration still focused on the Middle East and the “pivot to Asia,” regional and state leaders in the United States have a unique opportunity to change the conversation. U.S. cities and states should get to know Querétaro, as its progress pinpoints the challenges and opportunities of the maturing economy to our south, and holds some lessons for its northern neighbors, too. And they might learn, as we did, why signs greeting visitors say, Suertudo, vives en Querétaro (Lucky you live in Querétaro).

Authors

Joseph Parilla
Alan Berube

How Global Cities Adapt to Global Change

Alan Berube — Fri, 30 Nov 2012 16:00:00 -0500

Moving around (or trying to move around, at least) the city of São Paulo this week, spending time with the State Secretariat of Metropolitan Development, and visiting the port of Santos, it doesn't take too much insight to see that better transportation infrastructure is critical for the future global competitiveness of the entire São Paulo metropolitan region.

But I was struck at today's Global Cities Initiative (GCI) forum how many speakers and panelists, when confronted with the question of what one factor will matter most for the future of São Paulo , U.S. cities, and both countries, said the same thing: education.

The issue comes into stark relief in São Paulo thanks to the rapid de-industrialization the region has endured over the last couple of decades. By most estimates, services constitute 80 to 85 percent of greater São Paulo’s economy, up substantially from a couple decades ago when, as state governor Geraldo Alckmin explained, it was Latin America's industrial powerhouse. It still retains some of the nation's most advanced manufacturing sectors, but most of its low- and mid-skilled production jobs have fled to other regions of the country, or abroad to Asia.

One by-product of this industrial shift is an increasing demand for skilled workers to power existing firms, and to attract new investment. As in many U.S. cities, job quality is a chief concern in São Paulo as well, so that employment growth brings rising living standards.

Against that backdrop, it is amazing that only in the last decade or so has Brazil begun to provide universal primary and secondary education to its young people. It retains a world-class set of public universities, but even in the nation's most important regional economy, just 17 percent of adults hold a college degree. That's only about half the share as in the Chicago metropolis, for example. Given the ever-increasing pace of change in the global economy, especially in the traded sectors that shape the growth of cities, public leaders here recognize the need to dramatically accelerate educational achievement and attainment to maintain the city's global edge.

Government is responding. The average educational expenditure per student in Brazil rose 121 percent from 2000 to 2008, the largest increase among 30 countries. The government's Bolsa Familia program has helped as well, with payments conditional on school attendance. And as Eduardo Wurzmann of H&R Block Brazil observed, where 10 years ago education was not a major part of the public policy dialogue, one can pick up newspapers every day here and find significant coverage of the issue.

But as cities in the United States and around the world have learned, promoting adaptability and growth in city economies requires more than boosting education spending. Former Chicago mayor and Global Cities Initiative chairman Richard M. Daley, and mayors Antonio Villaraigosa of Los Angeles and Michael Coleman of Columbus, explained how their cities had stepped into the void of federal and state leadership to tackle tough issues related to education, job creation, and the environment. In an evolving federal system, Brazilian cities are still seeking the powers to act authoritatively like their American counterparts. Former Brazilian president Henrique Cardoso started this process of devolution in earnest in the late 1990s, handing over education and health responsibilities to cities, but explained how fiscal strictures continue to limit city flexibility.

Building city resilience is also not a one-electoral term project. Sustaining strategic investment over successive administrations, as discussed in Wednesday's GCI workshops, takes shared commitment across the public, private, and civic sectors. Mayors Daley and Coleman stressed how important partnership with business was to the success of their long-range plans. In that respect, it was heartening to hear Jorge Gerdau, president of Gerdau Group S.A. and the leading private sector spokesperson for Brazil's national competitiveness plan, list education as the number one factor critical to the future growth of the country, and especially cities like São Paulo.

And that made for a fitting coda to the first global GCI forum and our week in São Paulo. Cities exist, in the end, for the benefit of their people. So "going global" can only be a good thing for cities if it's a good thing for their residents. And those residents can only benefit from the opportunities that global trade and investment provide if they have the capacities--what Cardoso called the "human resources"--that ultimately promote economic adaptation and growth, and enhance local quality of life. That's a message that our two urban nations, and the metro areas that constitute them, can both embrace.

Authors

Alan Berube

Publication: The Avenue, The New Republic

Image Source: © Reuters Photographer / Reuters

Moving São Paulo Locally and Globally

Alan Berube — Fri, 30 Nov 2012 00:00:00 -0500

Sitting again in São Paulo's deadly rush hour traffic this morning, one has to wonder: Where are all these people going?

Of course, they're off to work. The São Paulo metro area has an unemployment rate of 5.9 percent, two full percentage points below the U.S. average. Many of its residents work in the schools, hospitals, retailers, and restaurants that serve the city's 11 million people, the 20 million in the São Paulo metropolitan region, and the more than 30 million in the São Paulo "macro metropolis."

Many others, however, form the lifeblood of São Paulo's traded economy, and the key to its economic growth. The São Paulo macro-metro has several assets that buoy its undeniably global reach--a top five international stock exchange, the largest cargo airport in South America, and key offices of hundreds of global firms. But one must travel 60 miles southeast of the heart of São Paulo, to its neighboring metro area Baixada Santista, to find arguably its most important international connection point: the Port of Santos.

One of Brazil’s original settlements--and home to international soccer star Pele--Santos has grown to become the largest port in South America. It handles 25 percent of Brazil’s foreign trade and accounts for 95 percent of exports from the state of São Paulo. Yet despite being the Southern Cone’s largest port, it is also one of the most congested. Demand has exceeded capacity to the point where it costs two and half times as much to move a shipping container through Santos as it does Rotterdam. When these costs are passed onto firms, the São Paulo region runs the risk of losing investment to locations with better freight and logistics infrastructure.

In this way, the trading capability and economic potential of Brazil’s most significant region hinges on how quickly and cost effectively the Port of Santos can move the region’s goods to market.

Understanding that imperative, representatives from the Port of Santos, CODESP (federal agency that operates the port), the city of Santos, and the Commercial Association of Santos shared with U.S. metro leaders their efforts to both expand and improve terminals at the port itself, as well as improving the surrounding road and rail infrastructure to facilitate more efficient goods movement from ship to destination. These multi-billion dollar projects require collaboration across local, state, and federal levels and between the public and private sectors. In turn, the officials from Santos heard from PortMiami Director Bill Johnson, who has stewarded parallel large-scale collaborative investments to prepare his metro for the super-sized post-Panamax container ships.

These port-related initiatives aim to address one important element of the broader "Brazil cost" (Custo Brasil) that still inhibits the country's fuller integration into the global economy. Taxes, regulations, and transparency all constitute barriers to further inward investment and trade nationwide. As Bruce Katz discussed at today's Global Cities Initiative forum, local leaders like the Port of Santos can innovate locally to become more competitive, and network globally with other leaders like PortMiami to establish new partnerships that can increase trade. But ultimately, they must also advocate nationally to push needed policy changes at the federal and state levels that matter immensely for local growth.

In the end, those changes and the growth they spur provide the fiscal latitude to support the massive infrastructure, skills, and other investments needed to sustain growth and increase local living standards. And make São Paulo rush hour a little more bearable.

Authors

Alan Berube

Publication: The Avenue, The New Republic

São Paulo and U.S. Metros Link and Learn Together

Alan Berube — Wed, 28 Nov 2012 13:26:00 -0500

Yesterday's discussions in São Paulo dug further into the challenges facing the São Paulo metropolis, the responses that governments are mounting, and obstacles to implementation and long-term prosperity. Among the issues tackled were infrastructure, land use, housing, social inequity, education, governance, and public sector capacity and continuity.

Turns out that changing hemispheres doesn't change some things all that much.

In that spirit, leaders from an array of U.S. cities and regions imparted their experiences in metropolitan development and economic growth strategies that might hold lessons for the city and state of São Paulo. Although the economic and social starting points for São Paulo and, say, Cleveland are radically different, a set of common themes, as well as key challenges for both American and Brazilian city leaders, came into view. Several of those themes were reflected in remarks that JPMorgan Chase Chairman and CEO Jamie Dimon delivered to the delegation at the start of the day regarding his firm's interest and investment in global cities:

1) Focus on the long term. Dimon sounded a bullish note on the global economy long term, noting the remarkable progress that has been made in recent decades, and the power of technology and urbanization to transform economies and societies for the better. Understanding quarter-to-quarter and year-to-year balance sheet fluctuations and economic performance is important for market transparency, he remarked, but responsible investment decisions must be made over much longer time horizons.

The same imperative should animate, but often bedevils, metropolitan development. Moving a regional economy in a new and more strategic direction can take decades, across several changes in political leadership, shifting priorities, and budget fluctuations. The city of São Paulo's SP2040 plan for instance, aims to develop three sub-sectors of the city to serve complementary functions for advanced services firms by better aligning industrial development, transportation, housing, and the environment. Similarly, the Chicago Metropolitan Agency for Planning (CMAP) developed the GO TO 2040 plan to meet the long-run infrastructure needs of that region's advanced services and manufacturing economy. Participants agreed that ensuring the success of both efforts over the next two to three decades requires building capacity and ownership outside the public sector to hold successive administrations to account for implementation.

2) Public/private relationships are a two-way street. Dimon related that when he became chairman and CEO at Bank One, former Chicago Mayor Richard Daley (chair of the Global Cities Initiative) discussed with him how the city could support the bank's continued presence and contribution to the local economy. Dimon stressed how important a supportive local business environment was for corporate investment decisions. At the same time, he emphasized that businesses must "get in the game" at the local level to support smart and strategic public spending on things like infrastructure and education, where public investment can yield clear private benefit.

The ambition of metropolitan business planning in the United States, as Brad Whitehead from the Fund for our Economic Future in Northeast Ohio explained, is to engage private, public, and other civic actors in charting and executing a strategic vision for a metropolitan economy. Adopting the rigor and language of a private-sector tool--business planning--has proven useful for developing business participation in realizing that region's plan. Leaders from São Paulo clearly recognize the critical role that business can and must play to deliver economic growth, and are engaging them around public/private partnership investment opportunities to alleviate the massive infrastructure deficits the region faces. But as Brazilian participants discussed, trust issues complicate the relationship between government and business here, even more so than in the United States. A common vernacular, and a focus on addressing issues of equity and social cohesion first and foremost through economic growth, may help advance those relationships.

3) Local is global and global is local. In a multinational firm like JPMorgan Chase, Dimon explained, the global and the local meet. A significant share of the firm's 20,000 employees in the Columbus, Ohio area, for instance, work not on local finance but in international markets. For that reason, local leadership in the public and private sectors must truly understand global markets and the opportunities and challenges they present for local job growth.

That merging of the local and the global is in many ways the animating idea of the Global Cities Initiative. Metro leaders from São Paulo and the United States not only traded ideas and lessons learned, but walked away with a better understanding of some of the dynamics affecting some of the world's most important economic centers. Representatives from World Business Chicago and Brazil Investments and Business discussed their respective visions and strategies for making Chicago and São Paulo globally competitive cities, including how their cities could adapt to long-run shifts in the global location of manufacturing and services activities. American metro leaders were meanwhile challenged and inspired by the "macro-metro" planning that is linking four metro areas in São Paulo state (Baixada Santista, Campinas, Paraiba Valley, and São Paulo) and helping to position a diverse, integrated, 30 million-person region on the global stage.

Like the scale of the city itself, the challenges facing São Paulo are massive. But they are not intractable. These discussions between São Paulo and U.S. metro leaders revealed fertile ground for continued dialogue, joint problem solving, and opportunities to understand not just one another's—but also our own—cities better.

Authors

Alan Berube

Publication: The Avenue, The New Republic

Image Source: © Paulo Whitaker / Reuters

São Paulo Striving to Keep Global Economic Edge

Alan Berube — Tue, 27 Nov 2012 00:00:00 -0500

What makes São Paulo a global city? Some might say its size. It is the largest city in South America. The São Paulo metro area, as our forthcoming Global MetroMonitor will reveal, is the 10th largest in the world by population and 13th largest by GDP. Others might point to its role as the finance capital of Latin America. Still others might point to its large international population, which includes the largest number of ethnic Japanese residents outside Japan.

Our contention in our recent Metro Trade report, and in our Global Cities Initiative [forum this week], is that trade and international exchange define a city's global character. There is no "yes/no" global city status, so much as a continuum of global engagement along which all cities sit by virtue of their firms' participation in the global marketplace.

In that respect, the São Paulo city-region is indeed highly globalized. As we heard in a presentation today by Aod Cunha of JP Morgan Chase, the São Paulo economy is much more knowledge-intensive and services-focused than are other parts of Brazil. The headquarters of dozens of national and multinational firms in Latin America--including 19 of the world's 25 largest banks—can be found here. At the same time, it is a manufacturing powerhouse, leading in aircraft exports via Embraer. And it retains an important role in Brazil's commodity economy, sending oil, sugars, and fruits to foreign markets, especially China.

Yet as São Paulo and other cities have begun to understand, the upsides of participation in global trade--gaining access to new sources of demand, boosting productivity, hedging against domestic declines--are balanced by the demands of real global engagement: brutal competition, frequent dislocation, and constant pressure to innovate.

So São Paulo faces some critical challenges to maintaining its competitive edge and re-asserting its leadership in the fast-changing Brazilian and Latin American economy. Chief among these, as Cunha described, is urban mobility and industrial development. One ride into the center of São Paulo city at rush hour, or from one neighborhood to another in the middle of the day—often a multi-hour project--tells you much of what you need to know about the urgency of the problem.

This partly reflects that, relative to demand, São Paulo's public transportation is underdeveloped and in need of upgrading and expansion. But it also reflects a planning and economic development challenge. One is struck immediately upon entering São Paulo from the airport 25 miles to the northeast how many high-rise residential buildings ring the outskirts of the city. Connecting those densely populated neighborhoods to the places in the region with jobs to keep firms competitive is a huge priority for the city and region and the subject of the ambitious SP2040 plan and its associated public and private investments.

These are not the only factors that will determine São Paulo's global success; tax and education reform are key issues that remain to be tackled at the national level for Brazil. But they provide a reminder of the key role that metropolitan leaders play through local investment decisions in supporting a city's global engagement. As Cunha concluded, there are too many variables to know whether Brazil will grow at 3, 4, or 5 percent in the long term ... but if it even hopes to grow at 1 percent, it can no longer afford to ignore the huge infrastructure challenges that face its most important metro economy and most globalized city.

Note: This post has been updated to reflect that São Paulo is home to 19 of the world's 25 largest banks, not 15 of the largest 20 as previously stated.

Read Metro Trade: Cities Return to Their Roots in the Global Economy »

Authors

Alan Berube

Publication: The Avenue, The New Republic

Metropolitan Trade: Cities Return to Their Roots in the Global Economy

Alan Berube and Joseph Parilla — Mon, 26 Nov 2012 00:00:00 -0500

Economic theory, world history, and contemporary experience show that metropolitan areas (i.e., city-regional economies) and trade are inextricably linked. Trade is essential to metro areas—it is how they grow their economies. And metro areas are essential to trade—they provide the specialization and market access that facilitates exchange among producers and consumers. This report examines how the intersection between metro areas and trade is motivating a new—yet old—approach to economic growth in an age of increasing international exchange and rapid urbanization.

Cities, not nations, were the original global commercial nodes. From the first urban civilizations in Mesopotamia, to the Silk Road connecting cities from the Mediterranean to central China, to the Crusades-era city-republics of modern day Italy, to the medieval network of maritime trading cities that formed Northern Europe’s Hanseatic League, cities were the indispensable actors of global trade before the rise of the nation-state. They enhanced trade by providing the physical space, constant interaction, and economic specialization needed to facilitate exchange between previously isolated actors.
Two centuries of economic theory reveal how metro areas both facilitate trade, and are themselves an outcome of trade. Adam Smith observed that large markets give rise to the division of labor upon which specialization and trade depend. This eventually led to Ricardo’s theory of comparative advantage and the Heckscher-Ohlin model of factor endowments that helped explain trade patterns among cities and nations. Marshall, meanwhile, explained how metro areas exhibit agglomeration economies that enhance their productivity and capacity for trade. And Krugman observed that in a world of mobile capital and labor, metro areas remain critical nodes for trade because their exporting firms can benefit from both scale economies and access to large local markets.
Metro areas depend on trade for their own prosperity. The goods and services produced by a metro area’s firms that are consumed elsewhere—its exports—inject income from outside the region into the local economy. In turn, that income supports the purchase of local goods and services, creating a “multiplier effect” that increases regional employment and income. Moreover, exporting—especially to international markets—entails high fixed costs and demands high firm productivity. As a result, exporting metro economies are overall more productive and wealthier.
Trade is becoming increasingly important to global and national economies, thanks in part to the growth of metro areas. The rapid advancement of technology, the growth of multinational corporations, and the concomitant rise of Latin America and Asia have helped to triple trade’s share of global output since 1950. Metro areas, meanwhile, increased their share of world population from just 30 percent in 1950 to more than 50 percent today. Urbanization enhances the productivity and export potential of countries, while upgrading jobs and incomes for their populations that can ultimately translate into demand for higher-value imported goods and services. In 2012, the world’s 300 largest metro economies contain approximately 19 percent of global population but account for 48 percent of world GDP.
Trade defines a metro economy’s global economic character. Not all cities are “global cities” in the way that researchers have defined the term, but all cities are touched by the process of globalization by virtue of their distinctive specializations and positions in complex global supply chains. Not only New York, London, and Tokyo, but also São Paulo, Buenos Aires, and Seoul lead in the production of advanced services. Madrid, Hong Kong, and Dubai are centers of media and information. Nagoya, Hannover, and Milwaukee are globally significant manufacturing hubs. And U.S. metro areas such as Wichita, Greenville, and Portland rank among the nation’s most trade-oriented economies by virtue of their world-class local industry clusters.
Metro areas are critical actors for helping boost national and global trade. Beyond national platform-setting activities like trade agreements, currency policy, and investment in research and development, forward-thinking metro leaders—in some cases together with state and national partners—are increasingly adopting strategies to enhance their global trade position. At one level, they are investing in the key assets that drive trade: building an innovation ecosystem in Shenzhen; improving human capital for the aerospace industry in Wichita; and using inherited land and infrastructure to build a world-class inland port in San Antonio. At another level, they are organizing for trade: conducting a detailed market assessment to inform new export strategies in Portland; coordinating regionally and with higherlevel governments to drive inward investment in Rio; and financially supporting the global trade ambitions of small/medium-sized enterprises in Hong Kong and Singapore. Finally, they are boosting trade by building structured relationships with trading partners, including cultivating sustained, market-oriented linkages with Beijing and Shanghai in the San Francisco Bay Area.

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Authors

Alan Berube
Joseph Parilla

Live from São Paulo, It’s Global Trade!

Alan Berube — Mon, 26 Nov 2012 00:00:00 -0500

This week, the Global Cities Initiative convenes its first overseas forum in São Paulo, Brazil. As participants from Brazilian city, state, and federal levels gather with counterparts from eight U.S. metropolitan areas, we are grappling with a critical question for our respective countries: How can our cities work together to advance national prosperity?

Our new paper suggests one key answer—trade. From the dawn of civilization in Mesopotamia, to the emergence of the Silk Road in Asia, to the Hanseatic League that linked port cities in Northern Europe, cities sprouted up to facilitate trade, even before there were nation-states. And trade makes cities, regions, and ultimately nations more productive and wealthier; Paul Krugman and his colleagues call a city's exports to the rest of the nation and the world its "economic rasion d'etre."

In the United States, however, city economic growth strategies—especially in the go-go real estate market of the 1990s and 2000s—have relied too heavily on housing, retail, and other consumption-oriented activities. Meanwhile, trade debates at the national level too often ignore the critical role of cities and regions in spurring innovation, productivity, and ultimately exports and foreign direct investment.

In response, a growing number of U.S. cities and metro areas are undertaking purposeful strategies to enhance their global reach and profile—for exports, investment, migration, and the like.

What does this have to do with São Paulo? As the largest metropolis in the Southern Hemisphere, São Paulo is now at a crossroads. It grew in the 18th and 19th centuries through the coffee trade, in conjunction with the nearby port of Santos. And it became Brazil's industrial powerhouse in the 20th century, eventually emerging into Latin America's capital of finance and one of the economic drivers of the "Brazilian miracle" growth of the 1990s and 2000s.

But of late, its growth has faltered. Other parts of the country are growing much faster; and as Brazil's economy cooled off in 2012, São Paulo's economy slowed even more. But Brazil needs São Paulo, which holds 10 percent of its population but generates 20 percent of its GDP. To grow Brazil's economy, São Paulo must build upon its competitive advantages to enhance its position in global trade and exchange, generating new sources of wealth for the city and the nation. Cities and metro areas in Brazil have not typically had a strong voice in these issues, but that may be changing with the election of new mayors and a new agency in São Paulo State focused on metro areas.

Each day this week, we'll look at the challenges and choices facing the 20-million person São Paulo metropolis as it strives to achieve growth and prosperity through trade and global linkages, including with U.S. cities and metro areas. How should it invest in the assets that drive trade, like innovation, skills, and infrastructure? How can it organize itself for trade, working with other players in the region and at the state and federal levels? And how could it network globally to forge strategic economic relationships with partner cities around the globe, including the eight U.S. metro areas represented here at the Global Cities Initiative forum?

The road to global economic prosperity runs through cities, our hubs of trade and commerce. São Paulo is an auspicious place to examine the potential for building a new network of trading cities across the globe.

Read Metro Trade: Cities Return to Their Roots in the Global Economy »

Authors

Alan Berube

Publication: The Avenue, The New Republic

The Continuing Evolution of American Poverty and Its Implications for Community Development

Alan Berube — Tue, 04 Sep 2012 15:00:00 -0400

Editor's Note: In a chapter from Investing in What Works for America’s Communities, Alan Berube discusses the changing characteristics of U.S. poverty, and how they influence community development efforts for populations most in need.

The product of a joint project between the Low Income Investment Fund and the Federal Reserve Bank of San Francisco, Investing in What Works for America’s Communities offers a collective account of new visions, strategies, and organizational examples surrounding community development for disadvantaged populations in the post-recession economy—highlighting the importance of people and place.

Much of the growth in unemployment during the Great Recession was thus concentrated among less-skilled, lower income, disproportionately minority individuals. It may take some time before the U.S. economy can generate job and wage growth sufficient to connect very low-income families to work, and eventually pull them out of poverty.

Community development gained currency over 40 years ago as a response to a particular set of challenges, affecting a particular set of people and places. From the Ford Foundation’s Gray Areas programs in the early to mid-1960s, to President Johnson’s Model Cities program, to grassroots community empowerment programs that grew out of the civil rights movement, community development focused the bulk of its early attention on inner-city, African American neighborhoods, particularly in the wake of urban riots in the late 1960s. While these new programs and community development corporations experimented with diverse tactics, the movement’s early leaders gravitated toward affordable housing and local economic development as key levers to attract private capital to help improve low-income neighborhoods, provide better opportunities for their residents, and reduce poverty.

Yet as this chapter documents, today’s poverty differs in several fundamental ways from the poverty that reformers set out to address more than four decades ago. Community development has evolved significantly, too, but perhaps not at the same pace as the underlying problems it set out to address. The incidence, location, and socioeconomic characteristics of poverty have shifted dramatically in some cases. These changes highlight a series of challenges for the future of place-based initiatives that aim to alleviate poverty, enhance economic mobility, and ultimately ensure that no one is severely disadvantaged by where they live.

The larger issue raised by this chapter, however, is whether community development—and place-based antipoverty policy more generally—can remain relevant to the national agenda if it is perceived as fighting the last war:

Can it serve the needs of diverse communities in an ever-more pluralistic American society, where immigration and Latino growth are continuously transforming low-income populations and the issues they face?
Can it shift its focus toward helping populations increasingly characterized by a lack of work in the post-recession economy, broadening activities well beyond housing and economic development to link people to much higher-quality skills than community-based job training has historically provided?
Can it move well beyond inner-city communities in a world of majority-suburban poverty, where traditional place-based strategies may bump up against radically different physical, economic, and social environments?

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Authors

Alan Berube

Publication: What Works for America

Image Source: Lucy Nicholson / Reuters

How Dallas is Going Global

Alan Berube — Tue, 05 Jun 2012 15:00:00 -0400

Is Dallas a “global region?”

It would sure seem that way. The region is the sixth largest metropolitan economy in the United States, and according to Brookings’ Global MetroMonitor, the 12th largest in the world. By virtue of size alone, Dallas appears to be a powerful force in the global marketplace.

Move beyond size, however, and the global status of the Dallas area seems to be in the eye of the beholder. Different observers have different definitions of what it means to be “global.” Various studies attempt to index the global-ness of major metropolitan areas on measures that combine the presence of major global corporations, human capital, cultural institutions, environment, quality of life, and economic growth.

Not surprisingly, the Dallas metropolis comes out in different places on different indexes: 25th (Economist Intelligence Unit), 28th (Global Urban Competitiveness Report), 36th (Brookings’ Global MetroMonitor), as an “Alpha-minus” city (Globalization and World Cities Research Network), or not at all (A.T. Kearney Global Cities Index).

These all-in-one indexes, however, tend to obscure why it is important for regions like Dallas to connect globally. More and more of the world’s economic growth is occurring abroad, especially outside developed markets like Europe and Japan. As the nation slowly recovers from a run-up in debt during the last decade, it has become clear that the United States can no longer rely solely on its vast internal consumption market for economic growth. The vast majority of growth in the global middle class in the next 20 years will occur in developing Asia and Latin America. To fuel their own economic growth, then, regions like Dallas must look increasingly to other parts of the globe—particularly rapidly growing urban areas—as sources of consumers, investment, and talented workers.

It’s along those lines that our own work at Brookings, as part of the joint Global Cities Initiative with JP Morgan Chase, aims to reveal the global nature and potential of U.S. metropolitan areas like Dallas. On June 7, the Dallas Regional Chamber will convene a discussion of the region’s global position that will draw on some of our recent research for the Initiative. Some highlights:

Dallas is a major exporter of goods and services to international markets. In 2010, its exports were valued at $41 billion, the 5^th highest total in the United States, supporting 280,000 jobs. Transportation equipment, computers and electronics, and travel and tourism rank among the Dallas region’s chief exports.
The region’s export performance reflects its strength in manufacturing. About 250,000 residents of the region worked in manufacturing in 2010, the fourth highest total nationwide. About one-third of the Dallas region’s manufacturing jobs have very high technology content, roughly double the national average, a sign that the region is today, and can remain for years to come, a global competitive hub for advanced manufacturing.
Dallas also benefits from inflows of high-value immigrant skills. In 2010-2011, the region’s employers requested more than 10,000 highly educated immigrant workers through the H1-B visa program, eighth highest in the country. Those individuals are part of one of the nation’s leading hubs for immigrants generally, in which 25 nations each account for at least 5,000 foreign-born residents.

Efforts to enhance international flows of goods and services, capital, and labor in ways that enhance regional competitiveness must be an economic priority for all regions. For now, Dallas is well-positioned in each of these areas. But local and regional leaders must continuously capitalize on their global profile by upgrading infrastructure to speed the flow of goods and people; investing in research and development and workforce training to spur innovation in advanced manufacturing; and embracing foreign workers and students as key conduits to markets and ideas abroad.

Being “global” is not an end in itself. Rather, global connections are valuable when they help regions achieve important outcomes for their residents. By focusing on the measures that matter for metro prosperity, Dallas has the potential to lead a still-insular America into the new economic frontiers of a truly global century.

Authors

Alan Berube

Publication: The Avenue, The New Republic

Image Source: David Sucsy